Thursday, November 6, 2014

INDIA- A FUTURE HUB FOR MANUFACTURING REPLACING CHINA-A GOLDEN INDIA IN MAKING

Abbott Laboratories  in Gujrat is in full swing without any interruption with world class roads.
Modi now in power at Central India as Prime Minister ,will change India like Gujrat has been changed in 13 years.
India vs. China: The Battle for Global ManufacturingIndian Prime Minister Narendra Modi is hoping other executives will be similarly impressed with the ease of manufacturing in his country. Before Modi took charge in New Delhi, he headed the state government in Gujarat, and during his 13 years in power there he made the state an industrial leader. Manufacturing accounts for 28 percent of Gujarat’s economy, compared with 13 percent for the country as a whole, and a touch less than the 30 percent figure for manufacturing titan China.
China became an export powerhouse because of its vast pool of low-wage workers, but it’s no longer so cheap to manufacture there. Pinched by double-digit increases in China’s minimum wages, many companies are looking for low-cost alternatives. Southeast Asian countries such as Vietnam and Indonesia are attractive, but they lack the deep supply of workers available in India. “It’s the only country that has the scale to take up where China is leaving off,” says Frederic Neumann, a senior economist with HSBC (HSBC). Vietnam and Indonesia? “Neither one is big enough to take up the slack,” he says, leaving India with a “golden opportunity.”


By 2016 the country’s growth rate of 7.2 percent will surpass China’s 7.1 percent, says CLSA senior economist Rajeev Malik.
The hourly labor cost in India for manufacturing averages 92¢, compared with $3.52 in China, according to Boston Consulting Group. But, says Anil Gupta, a professor at the University of Maryland’s Robert H. Smith School of Business, India hasn’t come close to matching China’s investments in the roads, ports, and power networks that companies want. “Lousy infrastructure essentially eats up any advantage the country may have on the labor front.”
Local leaders allied with Modi are trying to change that. In Madhya Pradesh the state government is creating 27 industrial areas while promising to improve infrastructure and make labor laws and land acquisition regulations more investor-friendly. Passing new labor laws that make it easier to hire and fire is especially important.
On the diplomatic front, Modi has adroitly taken advantage of the rivalry between Japan and China: After recent meetings with Japanese Prime Minister Shinzo Abe and Chinese President Xi Jinping, he won commitments for almost $57 billion in investments in India. China pledged $20 billion, and Japan about 4 trillion yen ($35.5 billion). Much of the money will be used to build a giant industrial corridor between Delhi and Mumbai featuring high-speed trains and superhighways. The goal, University of Maryland’s Gupta says, is to turn the area into the equivalent of southern China’s Guangdong province, which built special economic zones to transform China into an exporting power. India’s leaders “have the political ducks lined up” to make that happen, he says.
ARTICLE IN Businessweek